Worldwide demand for energy has recently begun to increase at an accelerating rate due, in part, to increased consumption by developing economies such as China, India and the region of Southeast Asia. This increased demand, primarily for fossil fuel energy, has resulted in pressures on energy delivery and supply systems, leading to sharply increased energy prices. These higher fossil fuel prices may, in turn, result in increased electricity prices to consumers due to the extensive use of fossil fuels in electrical generating plants.
Moreover, electrical generation and distribution systems in the United States have come under increasing pressure due to increased use of electricity and increased peak demand. Electric utilities have been forced to develop load management strategies to minimize supply disruptions during periods of high demand. Environmental concerns and energy price volatility have also become significant factors impacting power distribution, spurring the development of renewable sources of energy and encouraging residential consumers to become active participants in the generation of renewable energy.
Indeed, all of these factors are now moving the power industry away from the legacy power infrastructure system (where electricity only flows from the generation site to the distribution site) to a more intelligent power network where a bi-directional flow of electricity is managed by an associated communication network, working together to improve the efficiency and economy of power distribution. The communication network provides messaging between various components of the power network (generators, transmission links, distribution networks, end-user appliances, ‘smart’ power meters, etc.) so as to create an optimized power network/grid (often referred to in the art as a “smart grid”).
There is also a paradigm shift underway in the energy market from an integrated (monopoly) model to a more competitive model, the competitive model introducing an intermediary in the form of an “aggregator” as an interface between consumers and utility companies. In the integrated model, the generation, transmission and distribution of electricity is controlled within a well-bounded geographical area by a local utility company. This type of utility company is commonly referred to as a vertically-integrated utility.
The more competitive model beginning to emerge is partitioned between a number of separate and distinct entities: a power generation company, a market operating company, a transmission system operating company, distributors and retailers. This market change has been encouraged to achieve lower power system operation cost and higher efficiency, as well as offering the consumer the opportunity to proactively become involved through flexible choice options.
For the purposes of explaining the subject matter of the present invention it will be presumed that there are two major operational domains in this competitive model: (1) the market domain and (2) the network domain. (It is to be understood that while this presumption is valid in many situations, there remains a component of the electricity market where a single entity is responsible for generation, distribution and retail marketing (billing, etc.), falling into both the market domain and the network domain.) Within the market domain, the power generation companies make a bid to supply a certain amount of electricity at a selected price. The wholesale market operating company receives the bids from a number of generation companies, ranks them and then accepts enough bids to satisfy the forecasted demand (with a safety margin). The retailers then purchase electricity from the wholesale market operating companies at spot prices and sell retail electricity to their customers/consumers. With competition at the retail level, consumers can change suppliers when they are offered a better retail price.
Within the network domain, the transmission system operating company is primarily responsible for operating and ensuring the security of the transmission network. As such, the transmission system operating company is not involved in the “marketing” of electricity and its role in generation is limited to ensuring that the submitted schedules are within the transmission network security margins. Similarly, distributors are responsible for managing and maintaining related distribution networks via substation transformers and are not involved in the buying and selling of power. Distributors are also responsible for meter reading at the consumer's location and then communicating this information to the proper retailer for billing purposes.
Over the last few years, several innovative applications have been proposed within the larger scope of the “smart grid” as outlined above, based on the requirements of different market domains, such as commercial/industrial facilities, critical government facilities (e.g., military), and the like. One application in particular is referred to as a “microgrid”, which is defined for the purposes of the present invention as a localized grouping of electricity sources and loads that normally operate connected to—and synchronous with—a traditional, centralized grid (defined as a “macrogrid”), but can disconnect and function autonomously as physical and/or economic conditions dictate.
Furthermore, in the scope of successful deployment of smart grid applications, several initiatives to bring aggregators into the network model have been developed. For the most part, aggregators are treated as “electric service suppliers” that provide a related group of consumers with a broad category of innovative services including, perhaps, collecting a group of consumers into a single purchasing unit to negotiate the purse of electricity in the energy market. Also, these aggregators may function to negotiate “Demand Response” (DR). Demand Response is a program that seeks to reduce peak load in exchange for offering financial incentives to the consumer; that is, requesting the consumer to reduce their consumption during peak load conditions. In general, the aggregator business model has been proven successful in only the commercial/industrial market, where the amount of energy savings through DR during peak load time has been found to be significant.
While various new business models and features have been successful in providing economy to commercial/industrial electricity consumers, there has been no similar success in the residential marketplace. The existing aggregators available in the industrial and commercial domain are not interested in working with individual residential consumers, since their electricity consumption (on the order of kWh) is much less and their chance of savings during DR is not profitable for the aggregator. Additionally, residential consumers are not truly motivated to join the DR program, since there are associated up-front costs associated with ‘smart’ appliances, home automation devices, internal grid structures, and the like.
Thus, a need remains to provide a system architecture suitable for use in the residential environment that presents the benefits of consumer interaction with the electric utility business.